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More women founders equals more women in executive roles

New @KauffmanFellows study highlights that the strongest driver of gender diversity within rising startups is more women.

The Kauffman Fellows Research Center recently completed a study into gender diversity in venture capital and startups that found that when the number of women in founding startup roles increases, opportunities for success for other women increase as well. The study analyzed more than 90,000 companies, going back as far as 2001, and more than 400,000 employee data points. The first of two papers, “Data show that gender-inclusive founding teams have greater success in fundraising and innovation,” was published this week.

Findings include that the percentage of women-founded companies has grown from a low of 4% in 2001 to 21.6% in 2018.

“This is progress,” said Tammi Jantzen, co-founder and CFO of Astarte Medical, a healthcare startup devoted to improving outcomes for preterm infants. “But given that this is over a 17-year period and we are very far from parity, we have a long way to go.”

The study highlights that the strongest driver of gender diversity within rising startups is more women.

As the number of women in founding startup roles increases, opportunities for success for other women increase as well. It is statistically more likely women will be hired in executive roles when there is already at least one female founder at a startup.

For example, nearly 50% of consumer service firms with a woman founder had women serving as C-level executives, but only 10% of consumer service companies with all-men founders had women in C-level roles.

Lastly, companies with at least one female co-founder raise more capital by stage than all-male founding teams.

“Diversity is vital to startup growth, as it provides a greater pool to generate ideas from and allows for a greater understanding of potential consumer models,” said Lisa Feria, CEO of the Midwest venture capital firm Stray Dog Capital. “While the stereotypical startup is led by young men on the East or West Coast, that is not and should not always be the case.

“Startups are not all located on the West Coast or the East Coast,” she said. “We have amazing, incredible, innovative companies across the world. Our success could not have happened without a diverse group of people to meet and network with.”